HEMRAJ SAINI,JAIPUR vs. ITO (TDS), KOTA

Rival contentions have been heard and record perused.

The facts in brief are that the assessee is an individual and is engaged in the business of commission agent of vegetables in the name and style of M/s Hemraj Sohanlal. Return of Income for the year under appeal was filed on 11.02.2011 declaring total income at Rs.3,43,500/-. Subsequently, case of assessee was reopened by issue same income as was declared in the return filed u/s 139(1).

During the course of re-assessment proceedings the AO observed that the assessee had received payments on 24-11-09 and 25-11-09 to the tune of Rs.16,00,000/- and Rs.13,39,000/- from Hanif Khan, who was looking after sale and distribution of vegetables. The AO further stated that assessee had made payment to its creditors on 23-11-09 whereas cash was received by the assessee on 24th & 25h Nov.’09. Accordingly, he concluded that payments so recorded by assessee on 23rd Nov.’09 i.e. one day prior is unexplained. Accordingly, he added Rs.29,39,000/- (Rs.16,00,000 + Rs. 13,39,000) in assessee’ s income, against which the assessee preferred an appeal before the ld. CIT(A), who confirmed the action of the AO. The assessee is in appeal before me.

I have considered the rival contentions and gone through the orders of the authorities below and found from record that assessee is a small businessman carrying on business of vegetables on commission basis, after obtaining the same in the auction conducted in Krishi mandi. In this business, the assessee was taking assistance of one, Shri Hanif Khan, who was looking after distribution of vegetables and collection from customers. In the course of re- assessment, the AO observed that Shri Hanif Khan has withdrawn account on 24-11-09 and 25-11-09 respectively, however, assessee had recorded this amount in his books on 23-11-09. Accordingly, the AO treated an amount of Rs.29,39,000/- as unexplained in the hands of assessee as on 23-11-2009. In this regard, the statement of Shri Hanif Khan was recorded, wherein he stated that he was looking after business of assessee, Shri Hemraj Saini and also having his own truck business in which he was carrying the vegetables. He further stated that the amount of Rs.16,00,000/- and Rs. 13,39,000/- was withdrawn by him from his bank account on 24th & 25th Nov., 09 respectively, which was handed over to the assessee as his sale proceeds. Thus, neither withdrawal of cash from the bank was doubted nor it was doubted that cash was handed over to assessee. Merely on the plea that entry was done by assessee in his books on 23rd Nove.’09, which is one day prior to the day of receipt, the AO has treated the same as unexplained. It appears that it was merely an inadvertent mistake of recording the receipt on 23-11-09 in place of 24th & 25th Nov., ‘ 09, which created entire confusion. To ascertain that the assessee has used this amount on 23-11-09 neither the AO nor the ld.CIT(A) made an enquiry with the person, to whom part of the amount was allegedly paid by assessee. It is also not in dispute that total amount of Rs.29,39,000/- (Rs.16,00,000 + Rs. 13,39,000/-) was received by the assessee against sale proceeds through Shri Hanif Khan, who used to situated outside and delivered the same to the assessee. The assessee has credited the same as his income when it was actually received by him and he was unaware of the fact from which sources Shri Hanif Khan has given the amount to him. Since Shri Hanif Khan was also doing his transport business merely because the withdrawal from his bank account was on 24th and 25th Nov.’09, it can not be presumed that Shri Hanif Khan was not having other amount in his hands. Thus, the totality of facts and circumstances indicate that it was merely an inadvertent mistake of entry in the books of account i.e one day prior, which has led to all the confusions. Since neither the receipt of amount as income is doubted nor withdrawal of amount by Shri Hanif Khan from his bank account is doubted, there is no reason for making any addition for this confusion. Accordingly, I direct the AO to delete the addition of Rs.29,39,000/- ( Rs. 16,00,000 + Rs.13,39,000/-).

In the result, appeal of the assessee is allowed. Order pronounced in the open court on 24th …April, 2019.